The estate tax is one of the most controversial elements of the U.S. tax system, with tax rates as high as 40% reducing the amount of your assets that pass to your family members and other heirs after your death. Many lawmakers have sought to eliminate it, and many wealthy individuals use sophisticated tax-planning strategies to reduce or escape estate taxes. One of those strategies is called the QPRT, or qualified personal residence trust, and the disclosure that former President Bill Clinton and likely presidential candidate Hillary Clinton used the strategy to cut their potential estate tax has brought the QPRT into the news recently.

Even with its funny name, a QPRT can save you hundreds of thousands of dollars in estate taxes after your death. Let's take a closer look at what the Clintons did and whether the same strategy could help you.

Why the Clintons made the QPRT moveAccording to research done by Bloomberg, the Clintons created qualified personal residence trusts in 2010. They then transferred their New York residence into the name of the QPRT in 2011, thereby starting the clock on this time-sensitive estate-planning strategy.

By doing so, the Clintons achieved two things. First, by moving their home into the QPRT, they made a taxable gift that fixed the value of the home at the then-current value back in 2011. Second, depending on the time frame that the Clintons chose for the QPRT, the value of that gift to the qualified personal residence trust was further discounted to reflect the time value of money between 2011 and the expiration date of the QPRT.

Source: White House.

The rules governing exact valuation of QPRT gifts get complicated, so it can be hard to quantify the exact benefits of using the estate-planning strategy. But in simplest terms, the biggest benefit of a QPRT is that as the value of the home increases over time, that increase in value isn't subject to estate tax -- it has already been transferred out of the estate because of its placement in the trust. Given enough time, the increase in value can amount to hundreds of thousands or even millions of dollars, and at 40%, the savings in estate taxes can be huge.

Things to considerSo if the Clintons can use this strategy for estate planning, should you? The first thing to keep in mind is that everyone is entitled to an estate tax exemption, which for those dying in 2014 is $5.34 million. That number is adjusted for inflation each year, so unless your entire estate -- which includes your home, investments, and most other assets you own -- is above that amount, then the federal estate tax won't be an issue for you under current law. However, many states impose their own estate tax, and some states have much lower thresholds at which estate taxes take effect, making QPRT planning and other estate-tax-cutting techniques more important.

But the QPRT strategy has some potential pitfalls and trade-offs that you need to understand. First, if you die before the term of the QPRT ends, then you lose the estate-planning benefits, because the tax law pulls the residence back into the estate at its date-of-death value. While there's no set limit on how long a QPRT can exist, the longer you choose, the greater the discount -- but the higher the chance that you'll die before the QPRT term ends.

Second, you need to respect the change of ownership after the QPRT expires. In the Clintons' case, it's most likely that their daughter, Chelsea, will take ownership of the home after the QPRT term ends. At that point, if the Clintons want to keep living in the home, they'll technically have to pay fair-market rent to Chelsea in order to respect the legalities of the QPRT strategy.

Finally, it's important to realize that the QPRT doesn't allow you to get off scot-free on the tax front. Because the property isn't included in your estate, it doesn't get a stepped-up tax basis at your death, and so whoever inherits your home will have to pay capital-gains taxes on any gain in its value from what you paid for it. Capital gains rates are lower than estate tax rates, maxing out at 20% under current law, and the tax applies only to profits, not the full value of the home. It's therefore better to have to pay capital gains tax than estate tax.

Going the QPRT routeStill, for wealthy individuals, considering a qualified personal residence trust makes a lot of sense, especially given the uncertainty about the future of the estate tax. By taking steps now to control your potential tax liability, you can make sure that any changes in tax laws going forward won't cause you to miss out on the reduced taxes available from using a QPRT in your planning.

Take advantage of this little-known tax "loophole"The QPRT isn't the only way you can save on your taxes, and even those who aren't rich enough to owe estate tax can take steps pay less to the IRS. Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.